DotW Talks Pickles

With all due respect to our FOTF brethren, DOTW may take the occasional vacation from writing intros to our columns, but we somehow manage to put out a weekly edition with astonishing regularity. (In other words, none of that every-other-week stuff, you slackers.)

We do find ourselves in a bit of a pickle this week, with deadlines looming for IN VIVO, START-UP, and our annual Pharmaceutical Strategic Alliances meeting. (You’re coming, right?)

Mmm, pickles. In an ideal world we would simply be referring to a piquant condiment perfect for enlivening pedestrian burgers and dogs in what may be one of the last opportunities of the summer grilling season. But a whole lot of folks found themselves in a barrelful of briny situations this week. Let us dive in.

For starters, how about Jazz, Immunogen/Roche, and EpiCept, which all woke up on the wrong side of the FDA regulatory bed? Throw in Novartis, which still has to woo those pesky independent Alcon shareholders to its cause without shelling out an additional bolus of cash. And squirt on a little Sanofi-Aventis, which not only lost the first round in its fight to stop a Lovenox biosimilar but also can’t seem to seal a deal with Genzyme.

Better add Inspire Pharmaceuticals to that mix as well. This week Inspire amended its partnership deal with Allergan for late-stage dry eye therapy Prolacria. No surprise, really; back in January the company reported Prolacria failed to show efficacy in a Phase III clinical trial, and it's no secret revised deal terms typically follow in a partnership that suffers a clinical setback.

But the revision is a little more complicated since the Prolacria failure also triggered an amendment in the two companies' ongoing relationship for Allergan’s Restasis. To summarize some ancient history, Allergan and Inspire first teamed up in 2001 to develop dry-eye treatments in a deal that gave Inspire the right to co-promote Restasis. In 2008, Inspire withdrew from the co-promote, but still received royalties on the Allergan medicine at the same rate as before. But there was a very big hook.

The royalty rate was good only as long as Allergan and Inspire continued to work on Prolacria. Now ith no new plans for a study, Inspire will get less of the revenue pie from sales of Restasis and “any other human ophthalmic formulations of cyclosporine owned or controlled by Allergan." The upshot? Look for Inspire to focus instead on its denufosol and Azasite programs.

To avoid your own deal-making pickle (or even a jam), we bring you another edition of...

Roche/BioImagene: In a bid to keep locking up capabilities in personalized medicine, Roche, via its Arizona-based Ventana Medical Systems, this week took out the privately-held digital pathology start-up BioImagene in a deal worth $100 million. The take-out comes just two years after BioImagene investors put $26 million to work in a Series D financing, the small company’s only disclosed fund raising since its inception in 2003. Backers of the company include Burrill and Co., Ascension Health Ventures, Artiman Ventures, and Siemens Venture Capital, the corporate venture arm of industrial giant and competitor to General Electric. Indeed, that Roche won the small firm, known as a leader in pushing pathology into the digital realm, was somewhat of a surprise. Given Siemens’ involvement in the 2008 financing, its presence in imaging markets and its ambition to become a one-stop-shop for medical testing, the odds in Vegas probably didn't favor Roche as the buyer. Still, the deal is a strategic fit for the pharma, since it complements the pathology offerings already in-house as part of Ventana. Moreover, it enhances the Swiss company’s cancer workflow offerings, providing a service element that’s become increasingly of interest to imaging companies, diagnostic players, and even life science tools providers.—Ellen Licking

Procter & Gamble/Somaxon Pharmaceuticals: Somaxon is finally ready to launch the insomnia drug Silenor (doxepin) now that it has a co-promotion partner, Procter & Gamble. The San Diego specialty pharma announced the commercial arrangement Aug. 25, five months after Silenor received FDA approval. Under the agreement, the two companies will launch Silenor in September with a combined U.S. sales force of about 215 reps. P&G will provide about 105 reps who will promote Silenor to targeted primary care physicians and pharmacies, while Somaxon’s team will market to specialists and "top-decile physicians who treat insomnia," the firm said. For its efforts, P&G will receive a combination of fixed fees and royalties on U.S. net sales of the drug. In a same-day conference call, Somaxon CEO Richard Pascoe estimated P&G's take would amount to no more than 15% of the drug's annual net sales. The deal seems like a win for P&G, which made no upfront payment, and also gained an interesting downstream perk -- the right of first refusal to develop and commercialize Silenor as an over-the-counter product.—Joseph Haas

Roche/Aileron: On August 23, Roche announced it would collaborate with privately-held Aileron to use the biotech’s proprietary stapled peptide Pepducin technology to develop drugs against five unnamed targets, some of which have yet to be chosen. At north of $1 billion, the bio-bucks are eye-popping, but the specific deal terms don’t exactly break new ground the way Alnylam’s non-exclusive licensing deals with various pharmas or Celgene’s partnership with Agios have done. The five-target arrangement, centered around oncology and other therapeutic areas, is heavily back-end loaded, worth just $25 million upfront. It does, however, provide Aileron with additional validation and could be the prelude to a larger deal. As such, the deal provides Aileron with always welcome additional undiluted capital, and preserves its exit options. Aileron, which has raised around $60 million, wasn’t exactly hurting for cash. The company has commanded attention not only for its high concept science and platform capabilities, but also for its roster of four corporate backers, once again illustrating the importance of strategic investors in funding early-stage science.—Paul Bonanos and EL

Cypress Bioscience/Alexza; Cypress/Marina Biotech: Even as it continues to fight a public battle with hedge fund operator and minority shareholder Ramius, Cypress Bioscience inked a pair of small deals this week. The specialty player announced it would acquire rights to Marina Biotech’s autism drug for $750,000 upfront, plus milestone payments. It also licensed a preclinical smoking-cessation product from aerosolized CNS drug maker Alexza Pharmaceuticals. The agreement is worth $5 million upfront plus a $1 million milestone-based tech-transfer fee and includes a carried-interest fee in the event of a future acquisition of rights to Alexza’s Staccato technology for nicotine, an inhalable delivery system with electronic dosing controls intended to help smokers kick the habit. In the case of the Alexza alliance, Cypress will also pay for Phase I trials of the medicine, anticipated to commence next year. Back in June, Cypress, which markets fibromyalgia drug Savella (milnacipran), paid $30 million upfront to license an anti-psychotic drug candidate from Israel-based BioLineRx in a deal that also includes milestones. That partnership prompted a hostile takeover attempt last month by Ramius, which harshly criticized Cypress’ management and its acquisition strategy while offering $4 per share to acquire the company.--PB

Isotechnika/3SBio: Isotechnika announced an agreement Aug. 24 with 3SBio covering sales of Isotechnika's lead candidate voclosporin, a Phase III compound that helps suppress the immune system's rejection of transplanted organs. 3SBio will pay $1.5 million upfront to license voclosporin for transplant and autoimmune indications in mainland China, Taiwan and Hong Kong. The Chinese firm also will invest $4.5 million in Isotechnika via a three-year convertible debenture and will be responsible for clinical development, registration and commercialization in China. Interestingly, 3SBio also got the right to develop voclosporin products in other indications (including presumably ophthalmology where troubled Lux had worldwide rights via a 2006 deal.) 3SBio CEO Lou Jing said his company would work with Isotechnika to apply for approval from the Chinese State FDA for a Phase III trial inside China. 3SBio has become one company biotechs can look to for China-only licensing deals. Previously, 3SBio licensed Chinese development and marketing rights to AMAG’s chronic kidney disease drug ferumoxytol.--JH
Image courtesty of flickrer gadgetgirl used with permission through a creative commons license.

UPDATED TUESDAY 08.31.2010. Due to an editing error, IVB inappropriately referred to Aileron's peptide technology via the proprietary trademarked name of Anchor Therapeutics.--EL

DOTW Examines Paraskevidekatriaphobia And Other Aspects of Numerology

DOTW isn't superstitious. Nah, it takes more than yet another freak Washington DC-area thunderstorm and a power outage on deadline day to instill paraskevidekatriaphobia in this hardy crew. Then again, we did go out of our way not to walk under any ladders or cross paths with black cats. And thank G-d the main office only has 6 floors.

More sensitive souls should take heart. After a paranoia-inducing 2009 in which there were nine Friday the 13ths, today's combination of Friday and 13 is the only one of the year. (Turns out the number depends on the vagaries of the Gregorian calendar.)

Numbers figured more prominently in the biopharma news than in the actual deals that went down. Perhaps triskaidekaphobia is the reason financials went undisclosed in roughly half of deals outlined in this week's edition.

Back to the news. For Genzyme, 4 could be the crucial number, or the years it will take to right its troubled Allston Landing plant. News that Genzyme was taking a $6.5 million charge and a loss for the second quarter surfaced as industry wags and Vegas are still trying to figure out the odds of a Sanofi-Genzyme tie-up. Unnamed sources revealed to major news outlets that the French pharma had made an offer in the $67 to $70 dollar-a-share range.

Genzyme execs reportedly believe the company is worth around $80-a-share, which would drive up the deal's price tag by more than $2 billion to around $20.4 billion. According to Bloomberg, there's a high-stakes game of chicken being played, leading IN VIVO Blog to wonder if the lure of $23 million -- CEO Henri Termeer's golden parachute if a merger transpires -- might lead to some rapid eye movements.

Don't blink. You might miss hedge fund Ramius' sweetened offer for Cypress. Last month Ramius offered to buy 90% of Cypress it doesn't already own for $4-a-share, but the company rejected the offer as too low. Blasting Cypress' strategy, Ramius apparently might raise its offer if fruitful takeover talks occur and the division of Cowen Group has the ability to do diligence.

Another number to keep in mind: 100, or if you prefer, $100 million. That's the amount of sales Leerink Swann analyst Seamus Fernandez reckons Lilly will lose this year thanks to an August 12 court ruling invalidating a patent on its ADHD best-seller Strattera. With generic competition imminent, the drum beat for a deal grows ever louder. So much for the company's smaller efforts to buy time with investors.

IVB's favorite number? Try 20, as in this year is the 20th anniversary of our Pharmaceuticals Strategic Alliances conference. (You're going to be there, right?) As the countdown to PSA's uber-networking begins, rest assured IVB's got the available numbers and the analysis all wrapped up in another edition of...



Merck/Alectos: As we note in the July/August issue of START-UP, developing Alzheimer’s drugs ain’t for the faint of heart. Big Pharma is far from opting out the space, but given the difficulties and the very high profile failures we reckon pricey deals a la Pfizer’s tie-up with Medivation for Dimebon will be the exception going forward. Case in point: Merck’s deal this week with Alectos of Vancouver, BC. The two groups will identify new drugs that modulate O-linked N-acetylglucsaminidase (O-GlcNAcase), an enzyme implicated in the development of Alzheimer’s. Alectos, which spun out of David Vocadlo’s lab at Simon Fraser University, could receive up to $289 million, including an undisclosed upfront payment. The majority of the money is biobucks based on downstream research, development, and regulatory milestones. (There are also tiered royalty payments on sales of any products that result from the collaboration—when or if that happens.) Compare those deal terms, especially the undisclosed upfront, with what Medivation garnered in 2008 for Dimebon: $225 million just to seal the deal and another $500 million in milestone payments in a co-development, co-promotion arrangement that had Pfizer and Medivation sharing costs 60/40. Medivation’s drug was much further along at the time of partnering: Phase II versus Alectos’ preclinical molecules. But with the high failure rate of late-stage Alzheimer’s assets, it seems pharma has realized it’s no less risky and much cheaper to partner early and retain 100% of the development rights. Moreover, it’s easier to shrug off an undisclosed upfront than an eye-popping $250 million down payment if development doesn’t exactly go as planned. -- EL

Emergent BioSolutions/Trubion: Emergent said late Thursday, Aug. 12 it would buy the struggling Seattle biotech for nearly $97 million in cash and stock immediately with up to $39 million in possible milestones. The move gives the biodefense specialist, best known for its BioThrax anthrax vaccine, access to Trubion's clinical autoimmune and oncology programs, as well as its alternative protein platforms. The deal comes after a couple years of turbulence for Trubion, whose lead program TRU-015 stumbled in Phase II rheumatoid arthritis trials in 2007. The compound was left deeper in limbo by Pfizer's acquisition of Trubion's development partner Wyeth in early 2009. Pfizer dropped the program this June, but Trubion had since identified another promising candidate, TRU-016, for chronic lymphocytic leukemia. Trubion partnered it with Facet Biotech, which was later acquired by Abbott Laboratories, in August 2009 for $20 million upfront. Adding the the upheaval, Trubion's chairman, president and CEO Peter Thompson resigned in November with one of its investors, Steven Gillis of ARCH Venture Partners, taking the helm. For each Trubion share, Emergent will pay $1.365 in cash and 0.1641 shares of Emergent common stock, which comes to $4.55 a share or $96.8 million. Emergent will pay up to $39 million in cash if TRU-016 or other programs reach various milestones, such as the start of the first Phase II trial for TRU-016. The milestones expire after 36 months. -- Alex Lash

Endo/Penwest: In a deal that will bring it full control over its second-biggest seller, Opana, Endo Pharmaceuticals will buy drug delivery technology partner Penwest Pharmaceuticals for $5 a share, for a total of about $168 million. Endo also announced the filing of an NDA for a new crush-proof formulation of the extended-release version of Opana on Aug. 9. The specialty pharma’s acquisition apparently was driven largely by the opportunity to maximize the company's interest in Opana and Opana ER, indicated for relief of moderate to severe pain in patients who require continuous, around-the-clock opioid treatment for an extended period. The announcement came weeks after a settlement with generics challenger Impax Laboratories over the key patent protecting Opana ER. As a result, Opana ER won't face generic competition until January 2013, enough of a window for Endo to commit more resources to it. While its purchases in the past two years of Indevus and HealthTronics helped the company expand into the area of pelvic health, the acquisition of Penwest indicates Endo also recognizes the need to support its area of greatest success, pain therapeutics (See this recent IN VIVO feature for more.) -- Joseph Haas

PregLem/Merck Serono: This week’s tie-up between privately-held PregLem and Merck Serono for the mid-sized pharma’s Phase II-ready Jun kinase inhibitor bentamapimod shows companies are still willing to walk the outlicensing talk. PregLem’s priority these days is its Phase-III selective progesterone receptor modulator Esmya, in development to treat systemic uterine fibroids. But it turns out several of PregLem's 23 employees had at one time worked at Serono and been involved in the discovery and early development of bentamapimod. Their knowledge helped catalyze the deal, said PregLem’s CEO Ernest Loumaye in an interview with “The Pink Sheet” DAILY. Bentamapimod will move into proof-of-concept trials next year in prevention of post-surgical adhesions. The companies did not disclose financial terms when they announced the deal on Aug. 11. Founded in 2006 and backed through two venture rounds totaling $64.4 million by Sofinnova Ventures, Sofinnova Partners, MVM Life Science Partners and NeoMed Management, PregLem prefers to in-license clinical compounds that focus on women's reproductive health. -- JH

Topcon/Optimedica: As venture firms struggle to fill their own coffers, execs at private companies have been sharpening their pencils and streamlining their portfolios. The most recent example? OptiMedica, a privately-held biotech developing ophthalmic devices and best known for the development of the PASCAL laser technology for the surgical treatment of cataracts. This week the company announced it had partnered its glaucoma and retina assets to Topcon, a Japanese manufacturer of ophthalmic, optometric, GPS and positioning control devices. Terms of the deal were not disclosed but it is apparently the largest acquisition to date for Topcon’s medical division. OptiMedica, which has pulled in close to $55 million in funding from the likes of Kleiner Perkins Caufield & Byers and Alloy Ventures since its 2005 founding, will use the money to support the global launch of its laser cataract surgery system and sharpen its R&D efforts in the same space. Earlier this year the firm revealed the development of a proprietary femtosecond laser designed to improve cataract surgery by automating the most technically demanding steps. -- EL

Epitomics/Apexigen: With the follow-on biologics pathway still murky, many VCs and private biotech execs are pinning their hopes on developing bio-betters, large molecules that hit well validated targets but offer an improvement in efficacy, dosing, or route of administration than existing therapies and don't infringe on existing IP. (This despite the obvious travails of companies such as Trubion [outlined above] and AstraZeneca's MedImmune, whose Synagis follow-on has suffered a set-back with regulators .) On August 12, privately-held Epitomics, which has a proprietary rabbit monoclonal technology, announced it was spinning out to existing shareholders a new biotech company, Apexigen, which aims to develop and commercialize mABs for treatment of cancer and immuno-disorders. The move seems to leave Epitomics, a Chinese/U.S. biotech hybrid backed by Sycamore Ventures, Amkey Ventures, and Kenson Ventures, largely a discovery/fee-for service play, with Apexigen taking on the riskier, more expensive development work. According to the company, Apexigen inherits bio-better programs already initiated by Epitomics, including mABs against VEGF and TNF. No word whether Epitomics or its investors have pitched in with cash to get Apexigen off the ground. -- EL

Follow-On Biologics: Is There a Pathway?

So we knew that the generic drug industry was less than thrilled with the outcome of the follow-on biologics legislative debate, but we didn't realize it was this bad.

That is our conclusion after participating in a webinar hosted by the Washington Legal Foundation on the new biosimilars pathway enacted as part of the health care reform law. (You can watch a replay of the webinar here; and, yes, that is your humble blogger moderating...)

With so much attention focused on the exclusivity issue during the legislative debate, we were excited to have the opportunity at least to start to talk about the nuts-and-bolts of making follow-on biologics happen in the real world.

But boy does it sound like an uphill climb from here. We were struck by the case made by Bob Dormer, a founding partner of the DC law firm Hyman Phelps & McNamara, who argues that--all things considered--sponsors are better off just filing a conventional BLA than bothering with the new "pathway" for biosimilars created by the health care reform law.

Dormer offered the following points:

You can file a BLA at any time (rather than waiting at least four years to file the new, abbreviated BLA--and at least 12 years total for the innovator's data exclusivity to expire before marketing is allowed).

A BLA filing is secret, preserving possible competitive advantages. An ABLA must be disclosed to the innovator.

You can get to court on patent issues quicker, without going through the cumbersome-looking administrative process set up for ABLAs.

The data requirements probably won't be very different--and, for the time being at least, the BLA requirements are more predictable.

Last but not least, you are entitled to 12 years of exclusivity on approval.

Dormer's not the only one who feels this way. As we noted in "The Pink Sheet," Novartis' Sandoz division says it will focus on the BLA route, given the drawbacks it perceives with the new pathway; Teva has also opted to file a BLA for one of its biosimilar projects, and says it may do the same in other cases while it waits and sees what FDA comes up with.

That may be the key point: how will FDA translate the legislation into a regulatory pathway? As the WLF panelists agreed, there are far more questions than answers at this point.

We will of course be covering the details of FOBs implementation. And we will be hosting our own webinar on the theme in June; click here for details.

Image courtesy of flickrer B Tal who notes this piece of ancient wisdom: if we do not change our direction, we are likely to end up where we are headed.